Period:______Name:_________________________

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The Paper Clip Exchange

Paper clips are highly valued in the year 3000. Buyers and sellers meet yearly at the

paper clip exchange here in room 206. During the 5 minute long trading session, half of the
class will be buyers the other half will be sellers. Your goal is to make as much surplus as you
can by negotiating a favorable price. The buyer must try to buy pearls as cheaply as they can;
if they pay less than their maximum price, they get a consumer surplus. Sellers must try to sell
their product for as much as they can; if they sell above the minimum price, they get a
producer surplus. !
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There will be four trading sessions and you can only sell/buy once per session. When

you make a deal, shake hands and go tell Ms. Georgi your negotiated price to record on the
board. Then, return to your seat and write the results of the sale in the table below. For each
round, you will calculate your surplus using the formulas provided. In a sense, your surplus
represents how much money you saved while making the sale. If you dont make a sale or buy
a product during a round, your maximum or minimum price becomes a negative loss. Do not
tell others what your maximum or minimum price was at any time during the activity. (Ms.
Georgi will reveal this information when it is relevant).!

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Consumer Surplus = !
Buyers Max Price - Final Sale Price!

Producer Surplus = !
Final Sale Price - Sellers Min Price!
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Round:

Buying or
Selling?

Your Maximum
or Minimum
Price:

Negotiated
Price:

Example

Buying

$500 (max)

$250

Surplus (or
Loss):

1
2
3
4
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Round 1 average price: ____________!
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Round 2 average price: ____________!
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Round 3 average price: ____________!
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Round 4 average price: ____________!

Gives us an idea of !
Equilibrium Price!

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1. Describe what happened in round 3:!
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2. Describe what happened in round 4: